“Lack of funding is the biggest problem facing the housing market right now, according to the analysts, with subprime and Alt-A securitized markets shutting down and banks being forced to cut their mortgage lending dramatically due to capital constraints. So-called Alt-A loans are made to borrowers with less than prime credit ratings but who are above subprime.”
The highlight is taken from Reuters News Mail letter.

My previously posting on Jacky’s Opinion, Job losses in America; one of multiplier effect from Subprime Mortgages in America, I have told about economic theory explain the case with simple assumption, Constant Oil Crude Price and Businessmen take Capital From Loan.
Actually this post is quite well the same with my post in Jacky’s Opinion, but we focus on Loan, Bank, Mortgage and Economic Crisis. After Subprime attacked Banks and Property Investors, Banks have already been booked (yellow flag), more careful to accept new loans. The complication goes to worst because the multiplier effects are spread any sectors.

In this case, Property Businessmen and their lenders (Funding Banks) will get both negative impact because of Subprime Mortgages. While they are trouble, House Pricing is being declined.
Interest Rate is the indicator from those complications; Banks raised their Interest higher than Subprime rate. Both Banks and Borrowers have been attacked and suffered. Banks have loss and they have no money to continue their life, distribute loans to borrowers. Banks also get poor reputation from FED; entering them to blacklist. Borrowers’ Loans will raised because of interest rate, poor or bad credit will listed on their company (personal), If they have lost their Ability to payback their loans (we assumption that their business also loss), they are in Jail soon, staff, unemployment will run high and macroeconomic will decline.

We have good news from my Uncle Sam, America. Time lag had been working for 1 month, when LA Times sent me good news that Interest rate cutting by FED has show his magic. I think worldwide economic will be impacted and reaction to better condition. LA Times told on the report that credit problem return go nice.
What does it mean? When fall into Bad Credit, Number of dollar to payback their credit has arisen, now, people have ability to payback because of lower interest rate.

Understanding people must know that correlation between interest and ability to payback their credit or loan. Lower interest rate, makes people turn to invest their money or create a job. Lower interest rate also makes dollar to payback will lower than before.

When American economic goes better, oil price will meet new equilibrium, lower than before and my prediction, oil price will turn down and down, maybe stop and stabile around $ 90-100 USD per barrel.
While Uncle Sam Economic goes healthy, banks and loan company treasure and stock will be appreciated on stock market. Dollar is also appreciated in exchange market.
New equilibrium doesn’t mean that the price and dollar in exchange market will meet to previous equilibrium. New equilibrium will lower than the highest but upper than before equilibrium.
I do sure; oil price will turn significantly in recent days. Let us see our prediction.

I have post in earlier article, Time lag and Intervention talked about how long time lag is needed in order to make intervention (cut interest rate) work.

As we see, time lag maybe runs in short time or long run; while time lag work, what the impact or reaction when time lag is working. Reuters to day, send us the good report (actually bad report to American employee) because the impact from interest rate intervention by FED doesn’t work till now.

According to Reuters, The Labor Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest decline in five years. Financial markets saw the drop as reinforcing the need for further Federal Reserve interest rate cuts.

This is just the beginning; FED expectation on their interest rate cut doesn’t work well. Time lag make unemployment rise. The report is bad news but it’s real.

Economic Theory teach as that lower interest rate makes investment arise, more job available and more employees will be hired, but it doesn’t. The unemployment rate jumped to 5.1 percent from 4.8 percent, the highest since September 2005. Another word, There are 80.000 employees became unemployment now.

FED confess this problems, try to handle the phenomena and launch a new statement, perhaps that their intervention on interest rate will runs well in near soon. Expectation goes wrong. Increasing in total unemployment on March makes White House unhappy based on the Job Report from Labor Department.

By the way, Cutting interest rate, could make bad reaction or good reaction in time lag.

First at all, I would like to make our sense that we are outstanding people so we (like I) must keep in our mind that American Economic is central of world economic, a little case (all cases) is happened in America, the impact will broke the world economic. Their economic is more power than us. So we have to look careful, analysis the impact of all events (political and economic are the example) there in America.

Recent months, American falls down. The impact is happened everywhere, anywhere, any persons and all states. USD Dollar fall down in record against Yen, Pound Sterling, Euro, and others major countries. The impact also happened to all price products, especially oil price, gold, stocks, bonds, treasury bonds.
When Yen won has been winning against USD Dollar, in short run, Japan gained some advantages but in long run, Japan hope Dollar win against Yen because if the case happen too long, Japan Economic will fall down also. The same case was happened in Europeans, and All countries in Asia.

Good respond came from FED with FED interest rate intervention and strategies decision, perhaps the new equilibrium come.
Yeah, we have to say that American is still become leader and central of Global Economic so far. Maybe China will runs and win against America, the indications are showed with high economic growth in China.

Debt is an obligation in future. While future is uncertain condition, debt becomes uncertain condition in future also. You just make some prediction and analysis your ability to payback your debt based on some indicators such as your income (salaries), your sales, and interest rate. In macro economic we see that retail economic (micro economic is fundamental affected to debt. When FED cuts interest rate, macro economic analysis said that businessmen will turn to get credit because lower interest rate, macro economic is refreshing.

Example, if FED increases interest rate, businessmen stay at home, credit become low. Macro and micro economic run stagnant.

Another example; when interest rate raise, and oil price also raise, businessmen have loss. Profit down significant and they cut employees, fired some staff. Imagine one of the employees is you? Or as businessmen, you are the one which close your business because loss is higher than fix cost.

Those reason impacts to debt, as employees (personal payday or loan) you are in trouble in payback ability as well as businessmen, you close your company (business) than your debt is in trouble too.

Sharing your problem in Debt Consolidation Care!

If someone has a problem, she/he will find a friend to tell the problem. The case also happens to you. Sharing your debt, everything about debt in the Consolidation. Many unique debt cases are cleared there. You can share about everything, or find your related cases. You can asking and request to expert and to all Debt Consolidation members about your problems.

I do think you case isn’t alone. You think that you have unique case and no one has like you, by joining debt Consolidation care you can open your mind that you aren’t alone. Don’t shy with your debt. People sometimes shy and don’t want sharing their debt problem. In debt Consolidation care you can share everything include there the best creditor (lender), bad credit offers, asking Debt Community and all about financial problems.